In your final year or two at high school, you are going to hear plenty of talk about the cost of going to university or a polytechnic. Course fees, books, living and accommodation (and in most cases hefty student loans) can make getting a degree a costly business. The question needs to be asked – is it worth it?
Universities New Zealand says it still definitely is. In an analysis released in February this year, the organisation representing NZ’s eight universities estimates a typical university graduate will earn on average about $1.6 million more over their lifetime than will folk with no tertiary education.
Taking out student loan costs and time lost studying and not working, the differential can still average over $1m over your working lifetime. Using data on 2.15 million people in the workforce from the 2013 census, Universities New Zealand concluded that the better educated you are, the more you earn and the less likely you will be unemployed. Seems logical. Getting a bachelor’s degree can mean that on average over your lifetime you will earn around 40% more than workers with just a school qualification. Further study to honours, masters or doctoral level boosts those average earnings even higher.
In 2013, Ministry of Education figures showed the proportions of men and women aged 25 to 64 earning an income of over $50,000 were:
- 65% of men and 43% of women with a bachelors degree
- 44% of men and 20% of women with a school qualification
- 25% of men and 7% of women with no qualification
Maybe it’s your major that matters most
However it is not quite that straightforward. Some degrees can lead to far bigger returns from your working life than others. Increasingly, what you take can have a huge impact on what you make.
Chris Whelan, executive director of Universities New Zealand, says: “A typical university graduate will earn around $1.6m more over their working life than a non-graduate. This is much higher for a medical doctor ($4m), professional engineers ($3m) and information technology graduates ($2m), but is still high for arts graduates – with an average earnings premium of around $1m to 1.3m (depending on subjects).”
The trend of promoting students to take STEM - science, technology, engineering and maths – courses at university (and polytechnics) is being encouraged by the earnings these graduates can potentially look forward to. Among the top returns reported (compared to workers with no tertiary qualifications) are medical studies, engineering (mechanical, industrial, civil, electronic, maritime), economics, dental studies and law.
At the other end of the scale, degrees in complementary therapies generated a lifetime return around $75,000 lower than a person with only secondary school qualifications. Spare a thought for your teachers – many of them fall into the lower end of this scale.
The New Zealand experience is mirrored in the world’s biggest education market in America. A report from Georgetown University’s Centre on Education and the Workforce last year also saw STEM subjects heading the list of returns from a university degree. The very detailed report looked at almost 140 individual majors and as the NZ study showed, courses with the lowest lifetime returns were in the education, performing arts, social science and services fields. A similar result came out of a recent UK study as well.
Of course there are numerous other benefits of attending a university or polytechnic beside lifetime earnings and more employment. The fact that many more jobs require tertiary qualifications is one, so is the fact that a degree can help you find work overseas. The discipline of study helps prepare you with skills for the world of work, plus exposure to a wide range of subjects and people taking these, is a value that is hard to put numbers around.
So, is a degree worth it? The answer is yes, it can be, and particularly in the right subjects if your focus is purely financial. However, to paraphrase George Orwell in ‘Animal Farm’, all degrees are equal but some are more equal than others.